By: John Brose, East Liberty, Ohio
Retired, Local 413

I'm a retired truck driver of thirty years. I worked for Smith Transfer in Columbus, Ohio, in 1977 till they went bankrupt in 1988. I went to Consolidated Freightways till they went bankrupt in 2002. Then Roadway Express until they merged with Yellow Freight and I was laid off never to be called back. So I had to retire in 2009 with over thirty years of service.

Every week I worked 70 hours driving in all weather. Every week these companies put money in the Central States Fund for my pension.

I worked hard and even took less in wages for more pension benefits.

We had no vote on the Central States Pension Trustees or their policies. I've heard all their excuses but these pension fund trustees keep drawing their enormous salaries, for what? They even let UPS pull out of the pension fund.

I ask officials of the NCCMP to come up with a plan that does not cut our pensions down to as low as $1,100 per month! I wish you had to live under our pensions; then this plan would not exist.

When you bring this scheme to cut our pensions to Congress, I would like to be invited to speak for all of the retired men and women and show Congress how destructive this would be. When a truck driver has been retired for a few years, it is almost impossible to get another driving job. If you cut our pensions, it will be devastating to us and our families.

Twinkie-maker Hostess continues to screw over its workers. The company is in the process of complete liquidation and 18,000 unionized workers are set to lose their jobs. More troubling – they could lose their pensions.

According to a report by the Wall Street Journal, Hostess’ CEO, Gregory Rayburn, essentially admitted that his company stole employee pension money and put it toward CEO and senior executive pay (aka “operations”). While this isn't technically illegal, it's another sleazy theft by Hostess executives - who've paid themselves handsomely while running their company into the ground. Just last month, a judge agreed to let Hostess executives suck another $1.8 million out of the bankrupt company to pay bonuses to CEOs.  

If there's no way to recover the money for the Hostess pension plans for workers, then the Pension Benefit Guaranty Corp. will have to foot the bill to make sure workers get at least some of the retirement money they paid in.

Hostess shows us clearly what Bain-style predatory capitalism is all about: big bucks for the very few rich executives, layoffs and poverty for the workers and their communities.

And don’t mourn the loss of Hostess brands – they’ll be back, as the company is currently negotiating with over 100 potential buyers right now to bring Twinkies, Wonder Bread, and Ding Dongs back into the marketplace.  

The Hostess story has nothing to do with unions, and everything to do with the Enron-ization and Bain-ization of the American economy.  

In classic Enron style, back in 2005 Hostess sent out a letter saying they’d just had a very, very profitable quarter.  Their stock jumped up. The CEO, Charles Sullivan, and many of the senior executives sold chunks of their stock.   The CEO and senior executives were making out big, and the workers were making a decent living. 

At that time, one of the hostess workers – Mike Hummel, blogging as bluebarnstormer over at Daily Kos – noted that he was making $48,000 a year, a bit over the US median household income, and had insurance and a pension.  

Then, a few weeks later in 2005, came the letter saying that, oops, all of that profit had really been just an accounting error – the company was actually in trouble.  Although the CEO and the top guys had all made a nice killing selling the stock when it was high, and paying a maximum income tax on it of 15 percent because they used the Capital Gains loophole that Mitt Romney used to become a multimillionaire, they now wanted the workers to take a big pay cut. 

Hummel notes that the “oops” letter became the justification for asking the workers to take a pay cut, which they agreed to, and his pay dropped from $48,000 a year in 2005 to $38,000 a year last year.  But every year, $3 an hour of his compensation showed up in the worker’s pension fund instead of his paycheck.  Year after year.  With 18,000-plus workers, it was millions and millions of dollars.  Dollars that the workers had paid in, at the rate of $3 per hour.  

Then came the Bain-style takedown.  In order to strip the company down to its individual brands and sell them off, piece by piece, the company needed to bust the union.  The union said, “No,” so the company went to bankruptcy court – a method Bain and other vulture capitalists often use to kill off unions. 

In the meantime, the CEO and senior executives were paying themselves handsome salaries and big bonuses.  And where was that money coming from?  

On August 12 of 2011, the employees got a letter that said that the company was going to “temporarily suspend payments” to its pension funds.  That would be the $3 per hour that this worker had negotiated as part of his compensation – instead of paying it to him by putting it into his pension fund now, the company said they were going to put it in later. 

As the letter said, “I want to be clear that this temporary suspension of payments to the pension fund will not affect your pension benefits.”  

Workers believed management, and kept on working.  

But, it turned out, as we learned from that interview in today’s Wall Street Journal, that the senior management wasn’t just “borrowing” the pension funds – they were using them to fund ongoing operations.  Including big paychecks to the fatcats. 

Hostess CEO Gregory Rayburn wanted to make it clear that he wasn’t around when that particular thing happened. "Whatever the circumstances were, whatever those decisions were, I wasn't there," Rayburn told the Wall Street Journal.  After all, Rayburn isn’t a baker – he’s a bankster.  He’s the owner of Kobi Partners, a company that tells corporations how to “restructure.” Think Mitt Romney. And he’s going to make out very well on all this – the bankruptcy court just okayed $1.8 million in Christmas bonuses for the new fatcats at Hostess. 

Ironically, if you borrow money to pay for your education, you can’t get rid of that debt through bankruptcy – one of the “reforms” of the bankruptcy law during the Bush era.  But if you’re a CEO or a buyout bankster and you borrow money from your employees’ trust fund to be able to cover your own paycheck and million-dollar bonuses, and then take your company into bankruptcy, neither you nor the company have to pay those employees back even a single penny. Part of their pension is picked up by federally-run pension insurance, and the rest is just lost.  

There used to be a time in America when businesspeople had at least a modicum of ethics. Mostly it was because the majority of businesses were small- or medium-sized and locally owned, so the owners and managers had to look the employees in the eye. Or the unions were strong enough to keep the CEOs honest.

Reagan put an end to all that when he stopped enforcing the Sherman Anti-Trust Act, wiping out most of America’s small and medium-sized businesses, and when he kicked off the modern war on unions by firing the PATCO union strikers. You can see the result most clearly at any shopping mall or any downtown in America.  What used to be locally owned business are now big chains, from food to jewelry to clothing.

It used to be that CEOs shared the pain.  Lee Iacocca famously took a dollar a year as pay when he was working to turn around Chrysler. Steve Jobs did the same when Apple was in trouble.  Pretty much everybody who’s ever started a small business knows what it’s like to make payroll for workers while taking little to nothing themselves during the early years of the company.

But in today’s post-Reagan, Bain-model American capitalism, there’s never any risk for the CEO class. Instead, all the risk is borne by the workers. 

Karl Marx famously wrote that capitalism contains within itself the seeds of its own destruction. If true, the young, green shoots of that destruction may well be the corporate and billionaire excesses, ranging from the Hostess debacle to the billionaire oligarch Koch Brothers funding anti-union efforts by Rick Snyder and Republicans in Michigan.

This article originally stated that taxpayers would have had to foot the bill for the lost pension funds through the Pension Benefit Guaranty Corp. (PBGC), but in fact PBGC does not receive taxpayer funds on an annual basis. It has been corrected to say that the PBGC will pay out a portion of the lost pension funds, and that the rest of the missing funds will not be recovered by the workers.

The plight of the Teamsters' Central States, Southeast & Southwest Pension Plan has been in the news lately and its prospects are not good.

Documents filed at the end of 2012 by the Rosemont, Ill.-based fund show that its liabilities are almost double its assets – $34.9 billion vs. $17.8 billion.

In short, the nation's largest multi-employer pension fund is also one of its most troubled.

The plan today covers 65,000 union members and 212,000 retirees. Because so few employees are paying into the system compared to how many receive retirement benefits, the fund's assets plunged by $2 billion last year. The plan had a similar deficit in 2011.

Central States was started in 1955 under infamous Teamsters boss Jimmy Hoffa, whose namesake son is the current Teamsters leader.

Central States Executive Director Tom Nyhan told Congress in 2010 that the fund "is projected to be insolvent in 10 to 15 years," if no action is taken. He said the same thing in April.

Here's a look at what happened, what's being done to fix it, and what happens if the fund goes bust.

WHAT HAPPENED

A number of forces came together to put the fund in its current hole including market downturns with losses possibly exacerbated by heavier investments in stocks compared with other pension funds; company bankruptcies; businesses moving out of the country; and the withdrawal of UPS from the plan.

The biggest contributor to the fund's problems, according to Ken Paff, co-founder and national organizer of Teamsters for a Democratic Union, was allowing UPS to leave the pension plan in 2007. UPS, he said, is 10 times the size of any other Teamsters employer.

Keeping the largest employer in the plan would have kept the ratio of those paying into the fund compared to those withdrawing benefits close to the 1-to-1 ratios seen in another Teamsters fund, Western States, which is in good financial shape.

When UPS withdrew its 44,000 employees from Central States, it agreed to pay $6.1 billion for the right to do so. Much of the money was lost when the stock market tumbled in 2008. "Western bargained a broader base of companies into its plan," said Paff, whose grassroots organization seeks to unite Teamsters to take ownership of their union.

He added that the two plans had similar members to start with, but their fiscal paths have diverged, despite both having lost members who worked at companies that went belly-up or moved out of the U.S.

WHAT'S BEING DONE TO FIX IT?

The Teamsters back an austerity plan to keep Central States afloat. Those who receive pension benefits would feel that austerity. The union is part of the leadership of a group of employers, unions and pension funds urging Congress to take steps to revamp laws governing the plans. Included in their proposals is one that would allow funds at risk of being insolvent within the next two decades to cut benefits to current retirees and those who leave the workforce in the future.

The group, the National Coordinating Committee for Multiemployer Plans, said cutting benefits and reshaping how pension funds operate are the only way avoid a "taxpayer bailout."

The challenge, as Randy DeFrehn, executive director of the group, put it is, "How do we minimize the impact on all the stakeholders? We have plans (including Central States) clearly headed for insolvency. We've tried to provide a vehicle that said, 'Why not let plans cut benefits before insolvency?'"

Current federal law, part of legislation passed in 1974, makes it illegal to cut pension payments to anyone who has already retired. This proposal would undo that, but Congress would have to pass a law enabling the change.

Paff sees cutting benefits as a false choice that has been set up with letting the plan lapse into insolvency. "I guess if you make that the only choice, you have to do it," he said.

But on truly saving Central Sates, Paff is pessimistic: "You could use prayer. There's not an internal solution. We need to beef up the PBGC," referring to the Pension Benefit Guaranty Corp.

WHAT IF IT GOES BUST?

If Central States can't meet its obligations, the government mandated insurance agency, the PBGC, would take over paying benefits. But retirees will lose out, big time.

For starters, the top monthly benefits payment allowed would be about $1,200 (compared to nearly $5,000 under a single-employer plan that went bust).

Karen Ferguson, director of the Pension Benefits Rights Center, said reducing payments to those already relying on them is the wrong path. She said the Pension Benefits Guaranty Corp. needs to be revamped.

Assumptions made about multi-employer plans decades ago have caused problems, she said. For instance, when the PBGC was started in 1974 it was thought such plans could never become insolvent, so no insurance was provided.

"There was no insurance program until 1980," she noted.

When Congress enabled insurance for multi-employer plans, "the premiums paid to the PBGC were very, very low; $12 per year, per participant. That's $1 a month," she said. "If the premiums were raised to $120 per year" it would solve a lot of problems.

For his part, Paff sees pressing Congress to make the PBGC more robust as the only way to help those covered by troubled pension plans.

"I think the unions could even get AARP behind this," he said, referring to the powerful older Americans advocacy organization. "I believe this is a fight that can be won."

Opposition Needs to Grow Now
Congressional Hearings Coming on New Pension Proposals

June 7, 2013: A dangerous proposal that would change federal law to allow "deeply troubled" pension plans to slash the benefits of retirees could be introduced into Congress as soon as this summer.

The time is now for opposition to eliminating the federal law known as the "anti-cutback rule." It is clear that the "deeply troubled" plans would include the Central States Pension Plan.

The U.S. House Committee on Education and Labor could hold hearings soon on the status of multi-employer pension plans, and what to do to safeguard pensions.

The dangerous proposal is part of a package put forward by the National Coordinating Committee for Multiemployer Plans (NCCMP). Hoffa is on the board of directors, and Central States Director Thomas Nyhan and Teamster Int'l V.P. John Murphy are on the Steering Committee. UPS is a prominent supporter.

The NCCMP is an organization of union pension plans, employer groups and some union officials.

Teamsters for a Democratic Union (TDU) will actively oppose any move to eliminate the anti-cutback rule, which is an important protection in federal law. "We call upon James Hoffa to come out in opposition, and put the full force of the Teamsters Union to work for protecting Teamster pensions," said TDU Steering Committee Co-Chair and Central States retiree Dan Campbell.

There are new indications that some unions may come out in opposition to allowing pension cuts, and TDU will be working to put rank-and-file Teamsters front and center in the battle to protect pensions and propose positive solutions to safeguard the earned pensions of American workers.

If you are interested in helping with the battle to defend pensions, contact TDU at 313-842-2600 or click here to send us a message.

Click here if you would like to read more on this issue and see a copy of the NCCMP's proposal in their position paper "Solutions Not Bailouts."

May 24, 2013: UPS will save billions in lower pension costs during the life of the new contract as the company reaps the financial rewards of pension deals in the Central and Southern Regions and New England.

For the next five years, UPS will pay very substandard contributions in two of the largest pension plans covering more than 50,000 UPS Teamsters. 

Under the new contract, UPS will actually reduce its pension contributions in New England by $2.30 an hour. UPS will contribute just $6.20 an hour into the New England Pension Plan and contributions will be frozen at that rate for ten years.

By comparison, UPS will contribute $9.90 an hour into the Western Conference Pension Fund for full-timers and part-timers starting Aug. 1, and that figure will go up 50 cents every August—unless money is diverted away from members' pensions to maintain their health benefits under the new healthcare deal.

By the end of the year, UPS will be paying just under $12 per hour for Teamster pensions in the West and just $6.20 an hour for Teamster pensions in New England.

The company's savings are even more extreme in the IBT-UPS Pension Plan that covers 44,000 UPS full-timers in the Carolinas and Central and Southern Regions. UPS contributes less than $4 an hour into that fund.

Together, the two pension deals will save UPS more than $4 billion during the next contract alone.

It's true that UPS had to pay $6.1 billion to pull out of the Central States Pension Fund. But the company will make all that money back, and more, by the end of this contract.

UPS also had to pay another $43 million a year in withdrawal liability under the New England pension deal. UPS will save millions more than that in reduced pension contributions in New England.

The Bottom Line

Most Teamsters don't think much about our pensions beyond how much our monthly check will be.

The pension accrual for UPS Teamsters in New England is guaranteed for the next ten years.

The 30-and-out pension for UPSers in the Central, South and Carolinas will go up to $3,200 a month.

The annual accrual rate is frozen for another four years and then goes up only $5 in the fifth year which will keep benefits in the largest pension plan covering UPS Teamsters the lowest in the country.

The company takes the long view on pensions.

By the end of the contract, UPS will have made back the $6.1 billion in withdrawal liability it paid to Central States and will continue to save billions in reduced pension costs into the future.

"UPS has a long term plan on pensions; Hoffa and Hall don't," said Dan Kane, a retired member of Los Angeles Local 63. "It's only a matter of time until UPS comes after our pension plan. Why would UPS want to keep paying $12 an hour for pensions in the West when they're paying half or a third of that in Boston, Louisville and Atlanta? Members need to take back this union to defend our pensions."

Click here for Complete UPS Contract Coverage.

May 24, 2013: On April 14, some 3,000 retirees came to the union hall to hear an update from Al Nelson of the Central States Pension Fund. Many are concerned about the move by Central States and the Hoffa administration to pass a law which would eliminate the "anti-cutback" rule and allow Central States to cut existing pensions.

"I am glad we had a meeting for retirees at Local 41 in Kansas City. Vic Terranella, President of Local 41, was concerned that our members got some information from Central States on the proposed cuts in the "Solutions not Bailouts" document. Let your voice be heard loud and clear. Our solidarity must not waver. Many of you have worked 30 or 40 years for your pensions. So be part of a fair solution; stay informed and active. Talk with other retirees. Talk with your local and TDU. And join TDU. I did. TDU will keep you informed, and information is POWER."

David Scheidt, YRC, Local 41, Kansas City (Retired)

April 16, 2013: Three thousand Teamsters, active and retired, headed to the union hall in Kansas City. What sparked the monster turnout and what does it say about Teamsters and our pensions?

Over 250 people showed up at the Local 41 union meeting last Saturday. Another 3000 retirees showed up for a meeting that afternoon.

What sparked this monster Teamster turnout? A report from Central States Pension Fund representatives, after TDU broke the news that the pension fund and the Hoffa administration are lobbying to pass a new law that would allow Central States to cut pensions, including for current retirees.

The turnout shows that Teamsters in the Central States are deeply concerned. If you're one of them, keep reading.

Find out what Al Nelson, a top Central States administrator said about pension legislation that could lead to benefit cuts. And learn what Teamsters, active and retired, are doing to defend their pensions.

Kansas City, Here I Come

Teamsters turned out for the meetings in Kansas City in record numbers. They filled the hall. They filled the parking lot. Cars were parked on grass and all over the neighborhood. Police came to help unclog the traffic. Some 1500 retirees were able to get into the hall, while others had to be turned away.

Teamsters came for information. But it could be the birth of a movement, a movement to defend our pensions.

"We should have had media there, and invited Congressional people," UPS driver Wes Epperson told us. "We need busloads of Teamsters and retirees visiting our Congressional representatives, not just backroom lobbying by Pension Fund officials."

Epperson hit the microphone at the union meeting to question Al Nelson, the Benefits Services Director of the Central States Fund. 

Nelson started off with a routine report, noting the investment returns of the fund, etc. But the members' questions changed all that.  Here is what came out:

• Nelson said that allowing UPS to pull out of Central States in 2007 was a mistake, and that the fund opposed it, but could not stop the deal between UPS and the Hoffa administration.

• Nelson admitted that Central States and the IBT are part of the lobbying group behind the document "Solutions not Bailouts", which calls on Congress to enact a new law this year to allow “deeply troubled” funds (Central States) to slash pensions. 

• When questioned, Nelson admitted that their plan is to cut all pensions across the board now, with the intention of keeping the fund solvent longer.

Some members dropped F-bombs, but the main discussion was respectful and driven by well-informed members concerned about their pensions. And Nelson gave them answers.

Pension Legislation Smoke & Mirrors

At the second meeting of the day, the one for retirees, Nelson was startled by the big crowd and eager to put the right spin on things. This time he said the Solutions not Bailouts document is not an official Central States position, but just an opinion paper by some individuals.

If you believe that, we've got some high-priced YRC stock to sell you.

The fact is that the pension coalition that the IBT, UPS, and Central States Fund have joined has hired lobbyists, led by former Congressman Earl Pomeroy, to get legislative changes introduced into Congress this year.  

Pomeroy recently told a conference of actuaries that the recommendations in Solutions not Bailouts "are being drafted into bill language, and an effort to engage legislative interest has already begun."

Nelson told the retirees that their pensions cannot be cut if they have already received 13 checks. Many retirees left the room, happy to hear that. But Nelson forgot to mention that this could all change if the Congressional action being pushed for by Central States, UPS and Hoffa gets passed.

Retiree Dave Scheidt questioned Nelson and told us that "It should be about solidarity. In my 32 years as a Teamster, we have stood up for each other. On the Overnite strike line, and lots of other times. We should be doing the same to defend the pensions of all Teamsters."

Every Teamster we spoke with commended Local 41 for sponsoring the meeting, and mailing a notice to all retirees, who otherwise would never have known about it.

Should your local do the same? All it takes is an invitation to the pension fund, a notice to stewards, and a mailing to all retirees.

Teamsters Taking Action

The massive meetings in Kansas City shows Teamsters care about their pensions. They deserve information and a plan of action that brings members and retirees behind legislation that protects our pensions.

Members in some cities are starting to ask their Local to organize a Teamster Pension Meeting with a rep from the Central States.

"We need meetings here in Memphis, as well as all across the Midwest and South," said Willie Hardy, a Local 667 retiree and TDU organizer. "Members need information, and we need a grassroots campaign to defend our pensions."

You can be a part of this movement to defend Teamster members' pensions. 

Contact TDU for help. We'll help you put together a petition for a Teamster Pension Meeting with Central States in your local. 

TDU will also be organizing rank-and-file meetings to inform members about pension legislation and what action we can take to defend our pensions.

There is also talk about forming a Pension Defense Committee for all Central States retirees and Teamsters. If you want to be part of the solution, click here to send a message to the TDU with your ideas or questions.

A coalition of unions and employers is proposing changes to the federal law that governs the pension plans of about 10 million people, including reducing benefits paid to retirees, the first time in four decades that such cuts would be allowed.

The proposal, which would undo guarantees put in place by federal law in 1974, is already stirring controversy among pension-rights advocates and rank-and-file union members. It was developed by some of the nation's biggest unions, including the Teamsters and United Food and Commercial Workers, and industry trade groups such as the Associated General Contractors of America.

Pension experts say a report issued by the group earlier this year will likely serve as the foundation of a bill to replace rules governing pensions that expire in 2014. Sen. Tom Harkin (D., Iowa), chairman of the Senate committee overseeing pension policy, called the proposals, which include cutting retiree benefits, "a starting place."

"The fact that labor and management were able to come together and agree on a comprehensive proposal to protect the pensions of millions of middle-class families is a significant development," Mr. Harkin said.

The plan is the latest to address a chunk of the nation's creaky retirement infrastructure. President Barack Obama's budget proposal this past week could also lead to a reduction in Social Security benefits for retirees. And on Monday, the Government Accountability Office said the number of insolvent multi-employer pension plans could double by 2017.

Something must be done to shore up about 10% of the roughly 1,450 multi-employer pension plans in the U.S., pension experts say. The plans, which are funded by groups of employers in construction, trucking and retail food, and pay out a monthly check known as a defined benefit, are the backbone of the retirement security for 10.3 million retirees and current workers.

More than half of such plans are funded to at least 80% of their liabilities. That is up from one out of five plans at that level in late 2008, after the stock market tanked. But a minority is in far worse shape. As many as 150 multi-employer plans are headed toward insolvency, according to government projections.

For those troubled plans, unions and employers are proposing that the Employee Retirement Income Security Act of 1974 be rewritten so that benefits for people who are already retired can be reduced. Without that fix, advocates argue, the plans will run out of money and retirees will end up with a fraction of their current benefits when the government takes over the plans.

Advocates say early cuts can stave off deeper ones down the road. Under the proposal, trustees from labor and management would determine how deeply to cut benefits to return the plans to solvency. One labor official said the cuts could take effect within a year of the decision.

The cuts would depend on each plan's finances and could reduce benefits to as little of 110% of the level guaranteed by the Pension Benefit Guaranty Corp., the federal agency that backstops private-sector pensions. The 110% level amounts to $12,870 a year for people who retire at age 65 with 30 years of service.

"What we're really trying to do is salvage the system," said Randy DeFrehn, executive director of the National Coordinating Committee for Multiemployer Plans, a nonprofit group that assembled the labor-management coalition.

The coalition is recommending additional changes to multi-employer pension plans. It is also proposing a new form of pension plan that would carry less risk for employers than a defined-benefit pension, but is designed to provide more security for retirees than a 401(k). The assets are pooled, rather than held in individual accounts, reducing the investment risk to retirees. Employers would contribute a negotiated amount but wouldn't be liable for additional payments if funding levels dropped, as they currently are with multiemployer pensions.

Mr. DeFrehn said cutting retiree benefits is the controversial proposal, but noted that lawmakers have said they don't intend to bail out the pension plans. "This is kind of a reverse bailout," he said. "It shifts a lot of liabilities away from the public sector and the taxpayer."

Retiree advocates are raising red flags. Karen Ferguson, director of Pension Rights Center, a Washington, D.C., group that advocates for employees and retirees, said the union and management interest in the long-term survival of plans might conflict with the interests of older retirees who can't afford to lose their income now. She saidshe thinks legislation should make sure retirees have input in the cuts, and that Congress should consider alternatives to the cuts.

Greg Smith, 64 years old, a Norton, Ohio, truck driver who retired in 2011 after working 31 years, agrees. He now receives a monthly check for $3,019 from a Teamsters pension plan that is projected to become insolvent in 2024. If that happens, the PBGC would take over and his benefit could be cut to as low as $1,100 a month.

Under the new proposal, his benefits could be trimmed before funds run out, giving the plan's investments a chance to recover in the market. His benefits would be guaranteed not to fall below $1,210 a month, 110% of the PBGC level.

"It's a precarious position for a lot of us retirees," Mr. Smith said. "Let's come up with a plan that doesn't trash the retirees and put them in the poorhouse."

A spokeswoman for the Teamsters, which participated in the coalition, declined to comment on the plan or whether the union endorses it.

David Blitzstein, who oversees multi-employer plans for United Food and Commercial Workers, said cutting benefits remains controversial for unions, companies and members of Congress. He participated in the 18 months of talks that led to the proposals. "It was a very tough bullet to bite for everyone in the room," he said. Mr. Blitzstein said the majority of unions in the coalition supported cutting retiree benefits. The UFCW has openly endorsed it. It has retirees in about 60 multi-employer plans, covering 1.4 million people. He said cutting retiree benefits could be the only way to save about five deeply troubled plans, and added that it wasn't clear how much benefits would have to be cut. "We haven't modeled it yet in some of these really sick plans."

Over time, numerous factors have hurt the ability of plans to fund benefits. Bankruptcies have cut the number of employers paying into some plans, economic downturns hurt investment returns, and some policy decisions intended to strengthen plans ended up weakening them.

The first multi-employer plans were created during World War II, when wages were controlled by the War Labor Board. Pensions were offered to unions as a trade-off. They were among "fringe benefits." At first, company contributions were the sole source of income. Funding problems in the 1960s were addressed by the passage of Erisa in 1974, which required advance funding, and investments became the main funding source.

By the 1980s, some plans were so well-funded that companies risked losing the tax-exempt status of contributions. They responded by increasing benefits for retirees to levels that have never been reduced. Multi-employer plans recovered from the bursting of the tech bubble in 2000 and the median plan was 90% funded in 2007. But they were devastated by the 2008 market crash.

Now it's harder to make a comeback because plans' recent investment gains are based on a smaller asset base. Contributions by employers are made per hour worked, and have lagged behind as employment has remained weak. Many plans are starting to have more retirees drawing benefits than active workers. Some companies have paid a penalty to withdraw from plans to get the liability off their books, leaving fewer employers paying into plans.

Big and small companies now say their future is threatened by underfunded plans. The problem is also holding down wages and benefits for current workers in industries like trucking.

Judy McReynolds, president and chief executive of Arkansas Best Corp., ABFS -1.37%is among executives who back the coalition's proposals. The company's ABF Freight System unit participates in 25 multi-employer plans, and has 7,500 Teamster employees, two-thirds of whom are enrolled in troubled plans. She said half of ABF's annual pension contributions of $132 million are for people who never worked for the company, and that its contributions are 14 times greater than those of competitors. "This is not sustainable," she said. "It is imperative that we find concrete solutions."

Write to Kris Maher at kris.maher [at] wsj.com

A version of this article appeared April 13, 2013, on page A2 in the U.S. edition of The Wall Street Journal, with the headline: Union-Employer Proposal Would Hit Some Retirees

Some companies are pushing to withdraw their workers from a giant Teamsters pension plan that faces a deep funding shortfall and questions about its long-term viability.

Investment losses during the financial crisis and hard times for trucking companies that pay into the Teamsters' Central States Funds have sapped the fund of money it uses to pay promised benefits.

With just 60 cents of assets for every $1 in obligations, the Teamsters pension fund is considered in "critical" status by the Pension Benefit Guaranty Corp., the federal agency that backstops failed pensions.

Central States has about $18 billion in assets, ranking it the nation's second-largest multiemployer pension plan. Such funds get contributions from numerous companies.

The Teamsters pension fund pools money from about 1,900 companies, and its investments have been overseen by advisers jointly approved by representatives for union and management.

Recent efforts by Republic Services Inc. RSG -0.91% to pull out about 800 sanitation workers from Central States show the uphill battle facing a pension plan founded by the late Teamsters President Jimmy Hoffa.

Last week, Republic Services finalized deals with three local Teamster unions in Michigan to move out of Central States to a better-funded Teamster-run plan. Food service distributor Sysco Corp. SYY -0.19% removed its last Teamster unit from Central States in January.

"There is a reasonable possibility that this plan could run out of money in about a dozen years," Central States Executive Director Thomas Nyhan said in an interview.

More companies leaving the fund "accelerates insolvency," Mr. Nyhan said.

Central States illustrates a potential nightmare scenario for workers across the U.S.: a pension plan that is at risk of running out of money, leading to possible benefit cuts and putting strain on the federal agency that would assume the pension's liabilities.

"Our employees who participate in this failing pension fund and our Company deserve better," Catharine Ellingsen, senior vice president of human resources at Republic, said in a statement. "We intend to use all legal means at our disposal to exit Central States."

Union spokeswoman Leigh Strope said Republic is using the pension fund as a "smokescreen" to obscure what the union sees as separate problems at Republic.

She declined to comment on the financial condition of Central States, which is run independently of the union.

For decades, U.S. companies have shut down their traditional pension plans and moved workers to less generous 401(k) retirement accounts. In some cities, Republic has proposed replacing traditional pensions provided by Central States with 401(k) accounts.

"Pensions are a huge selling point for a union," says Ken Paff, national organizer of Teamsters for a Democratic Union, a group that opposes the Teamsters' leadership.

"If you take that away, you hurt the union's ability to organize workers," he said.

The price for exiting from the fund is steep. Republic estimates it must pay a "withdrawal liability" of as much as $146 million to cover the company's share of Central States' unfunded liability.

This amount could go up if the company stays in the plan and the funding level deteriorates.

Mr. Nyhan said he offered Republic protections that would eliminate future increases in the company's withdrawal liability. Other companies in the fund have adopted such measures, he said, but Republic rejected them.

Ms. Ellingsen said Republic's "employees only stand to gain in benefits by getting out of a pension fund that is going insolvent."

After investments losses from the tech bust in 2002, Central States cut retirement benefits and increased contributions from employers to shore up its funding level.

Heading into the financial crisis, Central States' had just received $6.1 billion that United Parcel Service Inc. UPS -1.12% paid in exchange for letting the company's employees out of the fund.

At the time, Central States had a large bet on the stock market—about 66% of its assets, according to Mr. Nyhan; the median stock allocation among multiemployer funds back then was 54%, according to Wilshire Trust Universe Comparison Service.

Goldman Sachs Group Inc. GS -1.17% and Northern Trust Corp. NTRS -1.95% were the pension fund's appointed fiduciaries responsible for picking money managers and setting asset allocations.

Since the recession, Central States' assets have dipped to $18 billion, from $27 billion in late 2007.

Goldman resigned from the pension plan in 2010 because the "mandate no longer fit with the company's business model," a person familiar with the bank's position said. Northern Trust is still a fiduciary, but the firm didn't respond to requests for comment.

Mr. Nyhan said he doesn't blame the banks for the steep losses. He said the fund needed to boost its returns with big stock allocations "because of the underfunded nature of the plan."

The pension plan pays about $2.8 billion in benefits a year but takes in only about $700 million in employer contributions. "You have to make up the rest with investment returns,'' said Mr. Nyhan, which he thinks is unlikely over the long term.

The recession also hurt some of the fund's largest companies, which meant smaller contributions into Central States.

Hostess Brands stopped making payments altogether, and the bankrupt maker of Twinkies owes Central States a $583 million withdrawal liability, according to pension-fund documents. A Hostess representative wasn't immediately able to comment on any pending balance.

If Central States can't afford to pay out benefits and the Pension Benefit Guaranty Corp. has to step in, some Teamster pensions would be slashed.

Under that scenario, Dave Scheidt, a retired dock loader from Kansas City, Kan., estimates his pension check would go from about $3,000 to $1,100 a month, based on federal guarantee rules.

"There are a lot of guys counting on these pensions," he says.

Sixteen people have been arrested during a protest of Patriot Coal Corp.'s bankruptcy reorganization plan in downtown Charleston today.

The arrests occurred on the outside steps leading to Patriot Coal's West Virginia offices at Laidley Tower. UMW President Cecil Roberts was among those arrested after the group refused a police order to move.

Thousands of union members protested Patriot Coal's bankruptcy reorganization plan. Patriot is trying to shed some of it's legacy costs by eliminating benefits to retired union miners.

By the thousands, union members stood in front of Laidley Tower at noon. The building houses the offices of Patrio Coal. The union accuses Arch Coal and Peabody Coal of creating Patriot Coal just so the company could file for bankruptcy and rid itself of pension and benefit commitments to some 23 thousand retired miners and their families.

Rick Bloomingdale traveled from Pennsylvania where he is the president of the AFL-CIO to fire up the crowd.

“These companies today whether it’s violating OSHA, MSHA, the National Labor Relations Act, pension laws, bankruptcy laws.  They’ve violated them all.”

Patriot, based in St. Louis contends it must shed itself of an over one and a half billion dollar liability in order to save 4,000 existing jobs. Today's rally began at the Charleston Civic Center where they heard from Gov. Tomblin, Sen. Manchin and others before taking to the streets to march.